**EXHIBIT 10.1**

 

**WAIVER OF LIQUIDATED DAMAGES**

** **

This Waiver of LiquidatedDamages, dated as of July 23, 2004 (this “***Waiver***”), is being executed and delivered byand among Intrusion Inc., a Delaware corporation (the “***Company***”), and eachof the undersigned holders of the Company’s 5% Convertible Preferred Stock, parvalue $0.01 per share (the “***Preferred Stock***”), pursuant to that certain RegistrationRights Agreement dated as of March 25, 2004, by and among the Company and thepurchasers listed on Exhibit A thereto (the “***Agreement***”).  Capitalized terms used but not otherwisedefined herein shall have the meaning ascribed to them in the Agreement

 

**RECITALS**

** **

A.    Pursuant to the Agreement, the Company has agreed to register forresale certain Registrable Securities on behalf of the undersigned.

 

B.    Section 8(d) of the Agreement provides that the Company must payLiquidated Damages to the undersigned if the Registration Statement coveringthe Registrable Securities is not effective by July 23, 2004.

 

C.    The undersigned serve as directors of the Company and have agreedto forgo any right to receive Liquidated Damages pursuant to the Agreement.

 

CONSENT AND WAIVER

 

1.                                       Each of the undersigned herebyirrevocably waive (i) any right to receive Liquidated Damages under Section 8(d)of the Agreement and (ii) any breach related to the Company’s failure of theCompany to pay Liquidated Damages to the undersigned if and when duethereunder.

 

2.                                       This Waiver is specific as to content andshall not be deemed to waive or modify any provisions of the Purchase Agreementor the Investors’ Rights Agreement by the Company or any of the undersigned,other than as specifically provided herein.

 

3.                                       This Waiver may be executed in any numberof counterparts, each of which when so executed shall be deemed an original,and all of which taken together shall constitute one and the sameinstrument.  In the event that anysignature is delivered by facsimile transmission, such signature shall create avalid binding obligation of the party executing (or on whose behalf suchsignature is executed) the same with the same force and effect as if suchfacsimile signature were the original thereof.

 

4.                                       This Waiver shall be governed by andconstrued in accordance with the laws of the State of Delaware, without regardto principles of conflicts of law thereof.

 

[Signature Page Follows]

 

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IN WITNESS WHEREOF, the undersigned have executed this Waiver ofLiquidated Damages as of the date first written above.

 
|   | INTRUSION INC. |
|--------|----------------|
|   |           |
|   |           |
|   | By:            | /s/  Michael L. Paxton |   |
|   |           | Michael Paxton |
|   |           | Vice President and Chief Financial Officer |
|   |           |   |
|   |           |   |
|   |           | /s/  G. Ward Paxton |   |
|   |           | G. Ward Paxton |
|   |           |   |
|   |           |   |
|   |           | /s/ James F. Gero |   |
|   |           | James F. Gero |

 

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